For some decades, global insurer Jardine Lloyd Thompson has made good money on providing pooled insurance to the overwhelming majority of Australia's 550 local councils. But now, a class action is preparing to take aim at the lucrative scheme, which in 2015 fuelled the local division to some 22 per cent of JLT's global revenues.

Law firm Quinn Emanuel Urquhart & Sullivan announced three months ago it was "well advanced" in its investigations into the operation of JLT's council insurance schemes, arguing the company has breached its fiduciary duties to local councils by recommending schemes whose premiums weren't the cheapest in the market. The law firm's Michelle Fox and Michael Mills plan to start filing the suits – in various jurisdictions, given the schemes were state-based – within the month.

JLT provides the majority of local council insurance in Australia because it used to be very difficult for councils to get individual cover. The solution was pooled arrangements through state-based mutuals administered by JLT. In recent years however, some councils who've left these mutuals and struck out on their own have been able, the law firm argues, to achieve cheaper premiums than they had in JLT's pooled structure. Other groups have provided support to this claim: a letter sent to mayors from Joe Arena, who heads Procurement Australia, said that since 2015 it's helped 26 councils generate savings of $12 million (an average cost saving of 31 per cent) through individually renegotiating their insurance cover.

But JLT fiercely rejects the claim that councils have paid excessive premiums, saying it just isn't supported by the facts. And JLT's Leo Demer has previously claimed that some who've left the JLT mutuals have since returned.

Nonetheless, the case appears to be gathering steam. Quinn Emanuel launched a website about the action this week to sign up more councils. It's already acting for the Mornington Peninsula Shire Council, including in a February Federal Court action where it successfully gained access to documents from JLT about how it administers the insurance scheme.